Blog

Note: Today's report includes votes from the unusual House and Senate sessions held the previous Friday, which occurred too late for last week's report, and included passage of landmark auto insurance reform. There were no votes to report this week, which was dominated by legislators' attendance at an annual Detroit Chamber of Commerce event on Mackinac Island.

Michigan lawmakers recently punted changes in educator evaluations to next year, with hopes that the state's education officials can iron out important details in the meantime. A new analysis shines a light on the challenges of adopting a truly effective policy.

Some Michigan legislators have introduced bills to try to get county road commissions to pay down their pension debt and prefund their retiree health insurance benefits. The bills would create a matching grant program and allow the commissions to levy property taxes to pay for employee benefits. Lawmakers shouldn’t have to encourage local road commissioners to do the right thing, however.

On May 21, the state approved a large set of corporate handouts for Fiat Chrysler Automobiles, which has said it would spend money on its manufacturing facilities in Michigan, creating, among other things, a new assembly plant. Such deals have been and remain unfair and unnecessary to Michigan’s well-being. The state should eliminate its corporate incentive programs in favor of a “fair field and no favors” approach to economic development.

Lansing politicians are trying to work out a deal on auto insurance reforms. No one has to convince lawmakers of this need — they hear it regularly from their constituents. While a lot of what’s being proposed is good policy and will provide relief for drivers — PIP choice, medical fee schedules, more intense anti-fraud efforts and greater transparency — one related issue is more problematic: restricting how insurers can price out the premiums they sell.

Each year the Mackinac Center for Public Policy and the Tax Foundation of Washington, D.C. work in concert to highlight key impacts of state cigarette excise taxes on tax evasion and avoidance (what we call “smuggling”).

Over time many states lawmakers have increased their states’ cigarette taxes to such a degree that lawbreakers have profited from moving cigarettes illegally from low-tax to high tax states. They do so to capture or arbitrage the difference between tax-induced price differentials which can often result in big savings or big profits for consumers and organized crime syndicates, respectively. Smuggling is not the only unintended consequence of higher taxes.

Update: On May 24 the Michigan Legislature passed a no fault auto insurance reform compromise bill, by a vote of 94-15 in the House and 34-4 in the Senate. Gov. Gretchen is expected to sign the bipartisan compromise.

Gov. Gretchen Whitmer has criticized the people who oppose her plan to raise fuel taxes for not coming up with an alternative. But lawmakers are required to pass annual budgets, so she won’t have to wait long.

The governor’s plan for the upcoming budget calls for $1.3 billion in new taxes for $800 million in additional road spending. No legislation has yet been introduced to do this.

There is a constant tension between consumers’ desires to buy green products and their willingness to pay for them. Electric vehicles typify this struggle because, even when a significant portion of their cost is covered by government subsidies or tax credits, they still demand a higher price than their internal combustion engine competitors.

For a long time, the costs to employ people to work for the state of Michigan increased even when the number of state employees was down. But it seems lawmakers and administrators may have finally changed the trends, and this can allow for more public servants at lower costs to taxpayers.

Severalnewsarticles and pressreleases from politicians have highlighted the fact that the proposed changes to Michigan’s auto insurance laws may result in increased costs for both Medicaid and private health insurance. There’s no denying this possibility — a key feature of these reforms is to allow drivers to limit or opt out of buying medical coverage through their auto insurance plan. While this is a valid concern, it is minor compared to both the savings motorists will realize and to the overall state spending on Medicaid.

Informed by the interests of business groups and the need to make a living, education policy is often discussed in terms of developing a skilled and productive workforce. But another value lies more closely to the heart of public education. That's the laudable but difficult goal of developing informed and responsible citizens who will one day govern our state and nation.

The public energy utility Traverse City Light & Power is set to vote on and possibly approve a municipal broadband project. This project is expensive and unnecessary, and new information raises even more concerns about moving forward with it.

People wanting to become or continue working as barbers, cosmetologists and athletic trainers in Michigan may soon be freed from some of the requirements they must meet to work legally. Two bills set to be taken up by lawmakers would get rid of some needless state mandates.

Efforts to reform Michigan’s uniquely expensive no-fault auto insurance system are nothing new. Dozens of studies, hundreds of anecdotes and millions of voters all point to the same conclusion: Reform is needed. And now, finally, the Senate and the House have approved separate bills that would significantly change the way auto insurance works in Michigan. Although the bills contain different elements, both tackle the fundamental problems with the current system and both would empower Michigan drivers to reduce their auto insurance premiums.

An op-ed in Bridge Magazine by Ronald Fisher, an economics professor at Michigan State University, cites an opinion survey that shows Michiganders significantly overestimate the amount of state gasoline taxes the average driver pays per month. The piece argues that half of the respondents think the average driver pays $50 or more per month, but the real amount, counting only the state fuel tax, is just $12. Fisher continues that if voters actually knew how little they pay in state gasoline taxes, they would be more likely to support hiking taxes to generate additional road funding.

There are a limited number of ways states can get themselves into financial trouble. That is because state governments balance their budgets. They require public approval to borrow. There is even sovereign immunity from lawsuits, which protects the government from being sued into financial straits. But one of the few ways they can get into trouble is by underfunding pensions. And states have dived into that problem head first.

Every person in Michigan relies, to a certain extent, on licensed workers. But the state’s licensing laws greatly reduce the number of people able to do those jobs. A new bill package would help change that.

A new report from Peter Q. Blair of Harvard University and Bobby W. Chung of Clemson University adds to the body of economic literature on the employment effects of licensing laws. “How Much of a Barrier to Entry is Occupational Licensing?” estimates that mandatory state licenses lower the number of people working in an occupation by 17% to 27%.

The public utility in Traverse City is moving forward with a plan to provide high-speed internet financed by ratepayers and, ultimately, backed by taxpayers. But Traverse City Light & Power has other issues it should be working on.

The prevailing view among many politicians is that the only way to spend more on roads and bridges is through a large tax increase. But that’s not the only way to prioritize road funding. There is plenty of waste in Michigan’s budget that lawmakers could use for this purpose. Not all of it can be cut immediately, but there is plenty worth pursuing if road funding really is a top priority.

Gov. Gretchen Whitmer recently unveiled legislative support for her plans to pitch in more state funding for eligible students to attend community college, with the goal of preparing more skilled members for Michigan's workforce.

A recent Detroit News story highlighted four Michigan high schools that reached the top 100 of U.S. News and World Report’s nationwide performance rankings, but omitted mention of a notable characteristic common to all four.

Today, due to a newly minted federal rule, the rest of the United States finally joins Michigan in ending the home health care dues skim, whereby Medicaid grants meant to fund the care of the elderly and disabled were being diverted to unions. In its 2014 Harris v. Quinn decision, the U.S. Supreme Court held that requiring mandatory dues or fees from these health care providers was unconstitutional. But since that ruling, unions have been subverting that decision. The new federal rule should put an end to this practice and will make certain that any money the union receives from these health care providers (who are typically family or friends of the care recipient) is truly voluntary.

Hunting and fishing is a popular way to enjoy Michigan’s great outdoors. But if some state lawmakers get their way, it might get a bit more expensive to experience the natural wonders of the Great Lakes State.

House Bill 4442 would impose licensing requirements on hunting and fishing guides — people who earn money providing assistance to others who want to hunt and fish in the wild. Currently, only people who are commercial guides on state lands are required to have a permit, but it only costs $50 and it appears its only purpose is to create a state registry of these businesses.

The governor wants a $2.5 billion tax hike in order to spend $1.9 billion on the roads and another $600 million on other priorities, and she proposed to implement this over two years. Legislators have their own opinions and some of them may want to find budget cuts in order to spend more on the roads. This tax-or-cut dichotomy misses an important point: The budget has grown a lot, and growth matters more than either tax hikes or budget cuts.